Optimism fuels buying spree
By Amy Baldwin
Associated Press
NEW YORK — Encouraged by news that the manufacturing sector has begun its recovery and that consumers are spending solidly, investors sent stocks surging yesterday, propelling the Dow Jones industrials up more than 260 points to its best close since late August.
The Nasdaq composite index, meanwhile, scored its best one-day point gain in nearly three months.
"The message is very clear: The outlook for the economy is getting better. The news is just very upbeat," said Hugh Johnson, chief investment officer at First Albany Corp.
The Dow Jones industrial average closed up 262.73, or 2.6 percent, at 10,368.86, the Dow's highest close since Aug. 27, when it stood at 10,382.35.
Meanwhile, the Nasdaq soared 71.25, or 4.1 percent, to 1,802.74, claiming its biggest point gain since Dec. 5, when it climbed 83.74. The Standard & Poor's 500 index rose 25.05, or 2.3 percent, to 1,131.78.
Yesterday's buying spree also helped the market post big weekly gains. The Dow rose 400.71, or 4 percent. The Nasdaq rose 78.21, or 4.5 percent, while the S&P advanced 41.84, or 3.8 percent.
"People want to move forward," said Thomas F. Lydon Jr., president of Global Trends Investments in Newport Beach, Calif. "People want to get back to being optimistic about their retirement accounts and their jobs and the future in general."
Investors were inspired by positive economic news yesterday. The Commerce Department reported that consumer spending, which accounts for two-thirds of all economic activity in the United States, rose 0.4 percent in January after being flat in December.
The department also said Americans' incomes, which include wages, interest and government benefits, also increased by 0.4 percent in January, the largest advance in six months.
Separately, the Institute for Supply Management (formerly the National Association of Purchasing Management) said its index of business activity rose to 54.7 in February from 49.9 January. It was the first reading over 50, the point signifying expansion, since July 2000.
The rally in tech stocks, which have lagged in recent weeks, was particularly encouraging.
Semiconductor stocks rose after chip equipment maker Novellus Systems said it would beat first-quarter earnings estimates by a penny. Novellus Systems surged $5.97 to $48.56. Intel climbed $2.43 to $30.98, while Advanced Micro Devices advanced $1.65 to $15.15.
All 30 Dow stocks moved higher, including General Motors, up $1.99 at $54.97 after announcing it was resuming zero-percent financing.
Microsoft, also a Dow stock, rose $3.03 to $61.37 a day after the company and the Justice Department announced technical changes to their proposed antitrust settlement.
Discount retailer Target, which Thursday beat analysts' fourth-quarter earnings expectations, rose $1.25 to $43.15 after Merrill Lynch raised its 2002 earnings estimate.
Still, analysts remained cautious.
"Volume is still somewhat light, showing that the rank-and-file still have some reservations," said Bryan Piskorowski, of Prudential Securities. "It's nice to see March coming in like a lion, but it's still a work in progress."
Advancing shares outnumbered decliners 7 to 3 on the New York Stock Exchange, where volume was relatively light at 1.43 billion shares, compared with Thursday's 1.35 billion.
The Russell 2000 index rose 8.98, or 1.9 percent, to 478.34.
Meanwhile, Japan's Nikkei stock average finished up 2.12 percent. In Europe, Britain's FTSE advanced 1.3 percent, France's CAC-40 rose 0.5 percent and Germany's DAX climbed up 1.2.
